Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges
AbstractWe use administrative data from five states to provide the first comprehensive estimates of the size of the for-profit higher education sector in the U.S. Our estimates include schools that are not currently eligible to participate in federal student aid programs under Title IV of the Higher Education Act and are therefore missed in official counts. We find that the number of for-profit institutions is double the official count and the number of students enrolled during the year is between one-quarter and one-third greater. Many for-profit institutions that are not Title IV eligible offer certificate (non-degree) programs that are similar, if not identical, to those given by institutions that are Title IV eligible. We find that the Title IV institutions charge tuition that is about 78 percent higher than that charged by comparable institutions whose students cannot apply for federal financial aid. The dollar value of the premium is about equal to the amount of grant aid and loan subsidy received by students in eligible institutions, lending some credence to a variant of the “Bennett hypothesis” that aid-eligible for-profit institutions capture a large part of the federal student aid subsidy.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17827.
Date of creation: Feb 2012
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Find related papers by JEL classification:
- I20 - Health, Education, and Welfare - - Education - - - General
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
- I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-20 (All new papers)
- NEP-EDU-2012-02-20 (Education)
- NEP-LAB-2012-02-20 (Labour Economics)
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- Gabrielle Fack & Julien Grenet, 2013. "Improving College Access and Success for Low-Income Students: Evidence from a Large Need-based Grant Program," Working Papers halshs-00870546, HAL.
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